Scholarship Model

The core mechanism where a Manager provides the necessary in-game assets (e.g., Axies, energy) to a Scholar who lacks the capital to start. The Scholar plays the game, generates Smooth Love Potion (SLP) or other rewards, and the proceeds are split according to a pre-agreed percentage. A typical split is 50/50 or 70/30 in the Scholar's favor, managed via smart contracts or platform dashboards.

Managers utilize specialized tools to scale and automate operations. This stack includes:

• Scholar Management Platforms (like Axie Infinity Manager): For tracking scholar performance, calculating splits, and managing payouts.
• Analytics Dashboards: To monitor SLP earnings, win rates, and team efficiency.
• Automated Payout Systems: Using smart contracts or platform features to distribute rewards transparently, reducing administrative overhead and trust issues.

The model incorporates controls to protect the Manager's capital. Key features include:

• Multi-Signature Wallets: Requiring Manager approval for asset transfers.
• Time-Locked Assets: Preventing Scholars from selling or transferring lent NFTs.
• Performance-Based Contracts: Agreements that can be terminated for inactivity or poor results. These measures decouple asset ownership from usage rights, enabling a trust-minimized economic relationship.

The model solves the initial capital barrier for players. By separating ownership from labor, it:

• Democratizes Access: Allows global players without upfront capital to earn income.
• Scales Yield Generation: Enables Managers to deploy capital across multiple scholars, optimizing asset utilization and ROI.
• Creates a Labor Market: Establishes a clear framework for gig-economy work within virtual economies, formalizing what was previously informal guild recruitment.

Moving beyond informal guild structures, the Scholarship Model uses smart contract-based agreements or platform terms of service to define:

• Revenue Split Percentages
• Payout Schedules (e.g., weekly, bi-weekly)
• Performance Minimums (e.g., minimum SLP quota)
• Termination Clauses This formalization reduces disputes and provides a clear legal and operational framework, making the model viable for larger-scale operations.

Yield Guilds (YGG) are decentralized autonomous organizations (DAOs) that operationalize the scholarship model at scale. They aggregate capital from investors to acquire gaming assets, then manage a large network of scholars. YGG tokens represent governance rights and a share in the guild's treasury, showcasing how the scholarship model can be tokenized and scaled into an investment vehicle beyond individual managers.

Managers operate like micro-VCs, requiring specific tools and processes:

• Asset Management Dashboards for tracking NFT health and scholar performance.
• Automated Split Contracts for trustless reward distribution via smart contracts.
• Recruitment & Onboarding systems to vet and train scholars.
• Risk Management strategies to mitigate private key exposure and scholar underperformance.

Modern iterations are moving beyond simple splits to merit-based systems. Newer games and guilds implement:

• Dynamic Reward Scaling: Payout percentages that increase with scholar performance or tenure.
• Skill-Based Advancement: Scholars can earn governance tokens or asset ownership stakes.
• Decentralized Reputation Systems: On-chain records of scholar history to reduce managerial overhead and enable permissionless lending.

The model faces inherent economic tensions:

• Token Inflation: Mass scholar farming can devalue in-game reward tokens (e.g., SLP depreciation).
• Extractive vs. Aligned Incentives: Poorly structured splits can lead to scholar burnout or exploitation.
• Regulatory Gray Area: The manager-scholar relationship can blur lines between partnership, employment, and investment, raising legal questions in various jurisdictions.

A permissionless evolution of the scholarship model, enabled by NFT Lending Protocols like reNFT and IQ Protocol. These platforms allow:

• Trustless Asset Leasing: Owners can list NFTs for fixed-term rental without handing over private keys.
• Fixed-Cost Rentals: Scholars pay a flat fee (in crypto) to rent an asset, keeping 100% of the rewards.
• Programmable Terms: Rentals are governed by immutable smart contracts, removing managerial intermediation.

The model's security is built on a single-point-of-failure: the manager's custody of the private keys for the game assets (NFTs) and the shared wallet. The scholar is granted access but not ownership, creating an inherent power imbalance. All in-game rewards are initially controlled by the manager, who must then execute the agreed-upon revenue split, a process reliant on off-chain trust or manual compliance.

Managers typically use one of two methods to grant access:

• Shared Wallet Credentials: The manager holds the seed phrase, sharing only login details. This is high-risk, as the scholar can be locked out at any time.
• Delegate.cash or Similar: Using a delegation protocol, the manager retains the NFT in their cold wallet but delegates its in-game use rights to the scholar's wallet. This is more secure but not universally supported by games.

To reduce manual trust, projects build on-chain scholarship smart contracts. These contracts:

• Hold the game assets in escrow.
• Programmatically enforce the revenue split, automatically distributing tokens (e.g., SLP, AXS) to scholar and manager wallets based on pre-set percentages.
• Define clear rules for termination and asset recovery, making the agreement transparent and tamper-proof.

Managers face significant financial and operational risks:

• Scholar Malpractice: A scholar can intentionally perform poorly (sandbagging) or sell in-game items, damaging asset value.
• Collusion & Multi-Accounting: Scholars may operate multiple accounts against game rules, risking bans.
• Operational Overhead: Manual tracking of performance, payments, and communication scales poorly, leading to errors and disputes.

Scholars, often in economically vulnerable positions, bear substantial counterparty risk:

• Non-Payment: The manager may withhold or delay payouts without recourse.
• Sudden Termination: Access can be revoked arbitrarily, ending income.
• Lack of Transparency: Without on-chain contracts, scholars cannot verify the accuracy of split calculations or the true revenue generated.

To mitigate these risks, third-party scholarship platforms (e.g., early versions of Yield Guild Games' dashboard) emerged as intermediaries. They provide:

• Reputation systems for managers and scholars.
• Standardized contracts and payment tracking.
• Dispute resolution mechanisms. However, these platforms introduce their own centralization and custody risks, becoming trusted third parties in a system designed to be trust-minimized.